Translated material
First hand
Gazprom does not consider the deal with Severenergia to be a sale of core assets
Deputy Chairman of the Board of Gazprom Alexander Medvedev explained why the company decided to sell its core assets with decent reserves - 51% of the shares of the Severenergia company - to a joint venture of Gazprom Neft and NOVATEK (see Vremya Novostey on November 8) . In addition, he explained the reasons for the arbitration proceedings between the Italian Edison and the Promgas company regarding the terms of supply of 2 billion cubic meters of Russian gas.Answering investors' questions yesterday during a telephone conference following the publication of the Gazprom group's consolidated financial statements for the first half of the year, Mr. Medvedev said that he was personally involved in preparing a deal with the former gas assets of Yukos, which, in his opinion, will take place on the market conditions. “I can give you a first-hand explanation,” he said. “During the preparation of the development plan, it turned out that they are complex in nature and have significant oil rims (this, however, was known long before Gazprom acquired the asset. - Ed. ).” According to him, such reserves in the group are handled by Gazprom Neft, so it was decided to sell shares of Severenergia to a joint venture of Gazprom Neft and NOVATEK. “The deal will take place on market conditions,” says Alexander Medvedev. Gazprom is negotiating with future shareholders about purchasing gas from the field for its portfolio. “This is not about parting with core assets, but their transfer to subsidiaries and affiliates,” the company’s top manager emphasized. Gazprom, as is known, owns 19.4% of shares in NOVATEK, but it does not seem to have a significant influence on decision-making in the company. Rather, on the contrary, the lobbying capabilities of other shareholders of the gas producer allow NOVATEK to have maximum favored treatment in relations with the monopolist.
The situation with Severenergia is further confirmation of this. Gazprom is selling the asset to Gazprom Neft and NOVATEK without any benefit for itself. As the concern explained to Vremya Novostey, for 51% of the shares of Severenergia, Gazprom will receive at least $1.75 billion from the Yamal Development JV. The transaction amount will include $1.5 billion for shares and about 250 million dollars as repayment of loans issued to Severenergia by Gazprom. At the same time, Gazprom itself spent about $1.6 billion on the acquisition of the asset from Eni and Enel (the amount also included a payment for shares in the amount of just under $1.5 billion and funds to repurchase part of the debt provided by Italian companies for development ). But such an approach can hardly be considered market-oriented from the point of view of the seller’s shareholders.
The same cannot be said about Severenergia. It is not for nothing that the Italian Eni and Enel in 2007 risked the prospect of legal persecution from the owners of Yukos and bought this asset with reserves of 13 billion barrels of oil equivalent at a state auction, having previously written out an option to Gazprom to buy out a controlling stake at cost.
In the lawsuit of the Italian company Edison against Promgas, Mr. Medvedev sees “nothing extraordinary.” According to him, the Italian company simply “exercised its right.” However, the reasons for transferring the settlement of disputes between the supplier and the client to arbitration, as follows from the explanations of the deputy chairman of the board of Gazprom, must be sought in the shareholder structure of the seller. “Promgas is a joint company between Gazprom and Eni, so our relationship has an internal conflict of interests. Not everything depends on us, a lot depends on Eni. In a joint venture, like in a marriage, it is sometimes difficult to come to an agreement,” Mr. Medvedev said. He did not disclose the essence of the disagreement.
Relations with Eni are very bad on all fronts. The company is sabotaging work on South Stream, has halved the selection of Russian gas under contracts and will be required to pay a large penalty. According to Vremya Novostei, in the case of Edison, Gazprom was ready to adjust the conditions in accordance with the market when switching to a direct contract, but Eni was not satisfied with this option.